Cash in investment account


J

Jim Orson

I have an investment account at Vanguard that contains several mutual funds
that is set up in Quicken 2005B as an investment account. It is NOT set up
as a Single Mutual Fund account. I recently exchanged the total balance
from one mutual fund in the account to another (existing) mutual fund in the
account. The Vanguard web site showed the exchange transaction correctly.
However, when I downloaded using One-Step into Quicken, the sale was shown
alright but the proceeds went into a "cash" account rather than the other
mutual fund. To correct this, I did a purchase of the 2nd fund for the
proper amount and let Quicken take the proceeds out of the "cash" account.

My question is, can I set up Quicken to make the exchange directly from one
fund to another without the intermediate "cash" step? This is an IRA
account and I don't have a sweep account set up with Vanguard. In fact
this transaction showed up just fine on the Vanguard web site. The only
place the "cash" occurs is in Quicken.

Thanks!

Jim Orson...
 
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J

JM

Did Vanguard initiate this transaction or did you?

If this was an exchange initiated by the FI then I believe a 'Corporate
Acquisition' is the proper transaction - a no cash exchange of shares.

If you initiated the transaction, then, in the real world, cash is
involved - shares of one security are sold generating cash which is
used to buy another security.
 
J

John Pollard

Jim said:
I have an investment account at Vanguard that contains several
mutual
funds that is set up in Quicken 2005B as an investment
account. It
is NOT set up as a Single Mutual Fund account. I recently
exchanged
the total balance from one mutual fund in the account to
another
(existing) mutual fund in the account. The Vanguard web site
showed
the exchange transaction correctly. However, when I downloaded
using
One-Step into Quicken, the sale was shown alright but the
proceeds
went into a "cash" account rather than the other mutual fund.
To
correct this, I did a purchase of the 2nd fund for the proper
amount
and let Quicken take the proceeds out of the "cash" account.
My question is, can I set up Quicken to make the exchange
directly
from one fund to another without the intermediate "cash" step?
This
is an IRA account and I don't have a sweep account set up
with
Vanguard. In fact this transaction showed up just fine on the
Vanguard web site. The only place the "cash" occurs is in
Quicken.
Just to amplify a bit on JM's remarks.

Vanguard (and other fi's) may use the term "exchange" when they
refer to such transactions, but they are not exchanges in the
manner you are thinking. They are a sale of shares of the old
fund and a purchase of shares of the new fund. In the same way
that a "reinvestment" transaction is not a single transaction,
but the payment of a dividend and the purchase of more shares of
the same security with the cash from that dividend.

Both an "exchange" and a "reinvestment" generate cash, even if
you never see it (and you do see it in some cases). It's just
that Quicken does not offer an "exchange" transaction, that
works like a "reinvestment" transaction, to spare you seeing the
cash, even if for only a moment.

Bottom line: There is no reason to be concerned about seeing the
cash, momentarily, in your investment account.
 
J

Jim Orson

John Pollard said:
Just to amplify a bit on JM's remarks.

Vanguard (and other fi's) may use the term "exchange" when they
refer to such transactions, but they are not exchanges in the
manner you are thinking. They are a sale of shares of the old
fund and a purchase of shares of the new fund. In the same way
that a "reinvestment" transaction is not a single transaction,
but the payment of a dividend and the purchase of more shares of
the same security with the cash from that dividend.

Both an "exchange" and a "reinvestment" generate cash, even if
you never see it (and you do see it in some cases). It's just
that Quicken does not offer an "exchange" transaction, that
works like a "reinvestment" transaction, to spare you seeing the
cash, even if for only a moment.

Bottom line: There is no reason to be concerned about seeing the
cash, momentarily, in your investment account.
Thank you JM and John Pollard!

I do understand that an exchange is actually a sale of one fund and a
purchase of another.

John, when you say "momentarily", do you mean that if I would have just
left the "cash" alone (recall from my post that I initiated the purchase of
the 2nd fund in Quicken using the proceeds in "cash") that the purchase of
the 2nd fund would have occurred normally on a subsequent download? Or
would I still have had to initiate the purchase in Quicken as I actually
did?

Jim Orson...
 
J

John Pollard

Thank you JM and John Pollard!

I do understand that an exchange is actually a sale of one
fund and a
purchase of another.

John, when you say "momentarily", do you mean that if I would
have
just left the "cash" alone (recall from my post that I
initiated the
purchase of the 2nd fund in Quicken using the proceeds in
"cash")
that the purchase of the 2nd fund would have occurred normally
on a
subsequent download? Or would I still have had to initiate
the
purchase in Quicken as I actually did?
By "momentarily" I meant that the first transaction is a Sell
which creates cash in the Quicken account, and is then followed
(nearly) immediately by a Buy which uses the cash in the Quicken
account. That is what happens in the real-world, and when you
record the transactions that way, the cash appears in your
register only alongside the "Sell" transaction. Once the Buy is
recorded, the cash balance drops by that amount.

I use Vanguard, and I have used funds from a Vanguard mm fund to
buy shares in other Vanguard funds. I do not remember what
transactions I got when I downloaded in those situations, but I
notice when I look online at my Vanguard history, there are two
transactions for each of those situations. In Vanguard terms
there is an "Exchange From" and an "Exchange To" ... really a
sale and a purchase.; and that's what I have in my Vanguard
registers ... Sells and Buys. I would have guessed that
Vanguard would have downloaded two transactions for each
"exchange" since there are two at the web site and since it
takes two transactions to correctly account for the event ...
but fi's often do not do what seems logical to the user. I
could easily have modified one or both action codes after I
accepted the transactions, or I could have added the Buy myself,
I just can't remember. (One small clue: I notice that both my
Buy transactions contain "EXCHANGE FROM Prime MM" in the Memo
field, and that is something I doubt I placed there, so I'm
thinking Vanguard did download two transactions for each event,
but that I may have had to modify one of them.)

I have 4 fi's that I get downloads from, and no two of them do
everything the same way; so I have gotten accustomed to doing
some cleanup after downloads ... just a little different cleanup
for each fi.
 
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J

Jim Orson

John Pollard said:
By "momentarily" I meant that the first transaction is a Sell which
creates cash in the Quicken account, and is then followed (nearly)
immediately by a Buy which uses the cash in the Quicken account. That is
what happens in the real-world, and when you record the transactions that
way, the cash appears in your register only alongside the "Sell"
transaction. Once the Buy is recorded, the cash balance drops by that
amount.

I use Vanguard, and I have used funds from a Vanguard mm fund to buy
shares in other Vanguard funds. I do not remember what transactions I got
when I downloaded in those situations, but I notice when I look online at
my Vanguard history, there are two transactions for each of those
situations. In Vanguard terms there is an "Exchange From" and an
"Exchange To" ... really a sale and a purchase.; and that's what I have in
my Vanguard registers ... Sells and Buys. I would have guessed that
Vanguard would have downloaded two transactions for each "exchange" since
there are two at the web site and since it takes two transactions to
correctly account for the event ... but fi's often do not do what seems
logical to the user. I could easily have modified one or both action
codes after I accepted the transactions, or I could have added the Buy
myself, I just can't remember. (One small clue: I notice that both my Buy
transactions contain "EXCHANGE FROM Prime MM" in the Memo field, and that
is something I doubt I placed there, so I'm thinking Vanguard did download
two transactions for each event, but that I may have had to modify one of
them.)

I have 4 fi's that I get downloads from, and no two of them do everything
the same way; so I have gotten accustomed to doing some cleanup after
downloads ... just a little different cleanup for each fi.
John,

Thanks for the detail. I looked at some old "exchanges" and they behaved
like you say in Quicken. However, this exchange was a bit different. I
made the exchange online at the Vanguard web site on Thursday evening. I
did NOT enter the exchange in Quicken. The transaction(s) didn't take place
until after COB on Friday (as expected). I downloaded from Vanguard on
Friday evening (after the web site appeared to be updated) and only the
first half (sale) of the exchange actually downloaded. The exchange on the
Web site at that time was complete. The sale proceeds simply went into
"cash" (in the mutual fund account) in Quicken. I proceeded to manually (in
Quicken) do a buy to the other fund against the money in "cash". I did
another d/l Friday evening and again Sat morn and everything seems to be ok.
Balances are all the same between Quicken and Vanguard. My theory is that
if I would have waited until Sat morn to do the first download, everything
would have been as expected (a sale, a purchase, no cash bal). I probably
jumped the gun Friday evening when the download file was not completely
updated yet. I'll keep an eye on this next time I make an exchange.

Jim Orson...
 

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